December 5, 2018

Cap rates’ spread over 10-year Treasury yields to average 350 bps in 2019

Cap rate compression likely will end, except in some high-growth secondary markets. Overall, cap rates likely will be flat, though certain retail segments may see moderate increases. Stable yields will continue to attract investors even as interest rates rise, and the substantial amount of capital available for real estate allocation will fuel acquisitions. Investment volume likely will be on par with 2018 levels, though entity-level transactions will continue to boost total volume as they did in 2018. Minimal appreciation in commercial real estate values is expected in 2019, but income returns should remain healthy. Learn how to be in an advantageous position next year by exploring CBRE’s 2019 Capital Markets Outlook Report.

Several Economic Factors Impact Cap Rate Movement

2019-Outlook-FIG07

Source: CBRE Research, November 2018.

U.S. Outlook by Sector

Capital Markets

Office/Occupier

Industrial & Logistics

Multifamily

2019 U.S. Real Estate Market Outlook

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